Bizzarri estimates that sales in the entire retail sector declined by 25% through COVID. Meanwhile, sales at grocery-anchored properties increased by 30%. Needs-based retail businesses also proved resistant to the threat from e-commerce, as they saw sales creep up by 3% even as other sectors saw declines.
“I think that through the pandemic, household savings rates grew substantially. You also had a lot of pent up demand for the in-store shopping experience,” he says. “You’re seeing a dramatic recovery in the retail market right now as more and more restrictions are being lifted. At most malls across the country today, you’ll see parking lots are full again, and foot traffic and sales have recovered to normal pre-2020 levels.”
For years, e-commerce has been a powerful headwind for the retail sector. But from where Bizzarri sits, the pandemic has taught the world that consumers still have an appetite for the in-store shopping experience. They might find products they like online, but as lockdowns ease, they’ll be more inclined to try them in stores rather than wait for delivery.
“I think there’s going to be a fragmentation of quality retail versus non-quality retail,” he says. “Higher-end retail focused on the shopping experiences will continue to perform well, but lower end retailers such as fast-fashion or lower quality products will suffer at the expense of e-commerce.”
Still, the post-pandemic shot in the arm to retail demand can only go so far. With inflation at multi-decade highs and interest rates on an upward trajectory, Bizzarri sees a real possibility of a downturn in consumer confidence.
